Sunday, November 29, 2015

POSTED: Tuesday, October 13, 2015, 11:15 AM

The drop in foreign currency valuse vs. the U.S. dollar has hurt U.S. manufacturers who invested abroad during the late commodity-export boom: Dupont CEO Ellen Kullman announced her abrupt departure after her company's foreign pesticide sales and profits plunged, "primarily in Brazil;" and Philadelphia-based FMC plans to cut 800-850 jobs worldwide to cover falling Brazil profits, FMC said here.

And it's not just manufacturers; In a "historic" change that marks the globalization of the once-insular U.S. insurance business, "the size of the currency exchange rate changes have been too large to ignore" for big insurers like Ace Ltd., Chubb (which Ace plans to acquire) and AIG, and investor "uncertainty and confusion" could hurt share prices in the months ahead, warns analyst Paul Newsome in a report to clients at Sandler O'Neill + Partners. 

Consolidation in the relatively slow-growing U.S. market and foreign expansion by U.S. companies has left the big firms more vulnerable to the rising dollar. The 22 percent summer drop in the Brazilian real and 5-10% declines in the Australian and Canadian dollars, Mexican peso and Korean won should trim Ace Ltd. earnings by a nickel a share in teh third quarter; as a group, big U.S. property/casualty insurers and borkers should see "third-quarter earnings reduced by 5% to 8% due to changes in currency exchange rates," Newsome writes. 

Joseph N. DiStefano @ 11:15 AM  Permalink | 0 comments
POSTED: Tuesday, October 13, 2015, 9:54 AM
British-born economist Angus Deaton of Princeton University speaks in a news conference after winning the 2015 economics Nobel Prize on the Princeton University campus in Princeton, New Jersey October 12, 2015. REUTERS/Dominick Reuter

Princeton University's Angus Deaton won this year's $1 million Nobel Prize for economics by bringing his ivory-tower profession down to earth and into homes where people are uplifted - or punished - by social, industrial, trade and tax policies. [See also my column in today's Inquirer; Intro and two chapters from his 2013 book The Great Escape (on how Western capitalism saved the world, unevenly) here; 2010 article he cowrote on personal income, satisfaction and happiness here.] 

Deaton is an optimist about the world's rising living standards of the past 250 years since English and Dutch capitalists began exporting modern methods of wealth accumulation and social organization - with very mixed results but a general rise in life expectancy and quality. He reminded a Princeton audience Monday that hundreds of millions still live in poverty, and many Americans face falling living standards amid "globalization". He detailed humanity's general but uneven progress in his 2013 book The Great Escape: Health, Wealth, and the Origins of Inequality.

The Nobel committee in a statement said Deaton helped discredit old "theoretical" models of how economies work. Instead, Deaton used "empirical" analysis of household-data surveys to better detail effects of changing prices and taxes on calorie intake, mortality, and other measures of personal and social welfare. His work, the Nobel gang said, addresses three questions:    
   - "How do consumers distribute their spending among different goods?"
1980s: Deaton developed the Almost Ideal Demand System, which estimates how demand for any purchase depends on price levels and individual incomes -- now a “standard tool” in economic policy.
   - "How much of society's income is spent and how much is saved?"
1990s: Deaton pointed out the failure of dominant macroeconomic theory to match observed income/consumption relationships through business cycles. Instead, he aggregated individual income and spending data, which has gotten easier with modern computing.
   - "How do we best measure and analyze welfare and poverty?"
2000s: Deaton used detailed, rigorous measures of what households spend to shed light on economic development patterns, living standards and gender discrimination, and show difficulties in measuring poverty.

Joseph N. DiStefano @ 9:54 AM  Permalink | 0 comments
POSTED: Monday, October 12, 2015, 10:30 AM

Dell Computer's $67 billion cash-and-stock offer to buy computer-storage-device maker EMC Corp. is a big bet by founder Michael Dell to add products and clients, combine costs, and keep his company relevant in a slower-growing corporate-computing market. "The deal would combine EMC’s dominance in devices that store data with Dell’s No. 2 position in servers, the powerful machines that help companies handle big computing challenges," writes Bloomberg here.   Dell statement here.

Founder Dell has been seeking ways to recharge his company since taking it private for $24.5 billion with backing from private equity investor Silver Lake and Microsoft two years ago. (Dell was a dominant and much-traded U.S. computer-manufacturing stock through the 1990s but is less important with the shift to software and cloud services. I talked after the going-private deal with Stephen Felice, a senior Dell lieutenant raised in Northeast Philadelphia; he left later that year and is now CEO at manufacturer Filtration Group in Chicago.) 

"For EMC, the agreement addresses pressure from activist investors who have been agitating" for EMC to spin off software-maker VMWare or find another plan for growth," Bloomberg added. EMC boss Joe Tucci "has agreed to stay at the company through the close of the deal." Dell will run the combined companies from Texas; EMC is based in Massachusetts. EMC gained cloud-computing exposure to SAP AG and other big business-software companies when it bought VirtuStream earlier this year.

Joseph N. DiStefano @ 10:30 AM  Permalink | 0 comments
POSTED: Monday, October 12, 2015, 9:47 AM
Alva C. Mather, alcohol lawyer at Griesing Law in Philadelphia, in the doorway of Old City bar National Mechanics.

WEDNESDAY: Alva C. Mather, alcohol lawyer at Griesing Law in Philadelphia ( @Alcohollawyer , for real), writes us these 5 predictions for the planned $106 billion AB InBev-SABMiller deal:
 -- "The US Department of Justice is unlikely to approve a full merger," so SABMiller will likely end up selling the Miller brands and holding onto the acquired companies' foreign lines.
 -- "This merger will likely lead to other consolidations and mergers within the industry, with potential buyers such as MolsonCoors, Constellation Brands and potentially other foreign brands such as Heineken" going after Miller and other industrial brewers.
 -- The merger will force changes in suplier control, and in each market "the new supplier will seek to move the brands to their network of distributors wherever possible. Many states have franchise laws in place that limit these moves." So it's a good time to be a beer lobbyist or a brewery lawyer or dealmaker; there will be "a lot of money changing hands between distributors buying and selling their interests."
 -- Even without Miller, the combined companies will have "huge purchasing power which may allow them to be more aggressive in acquiring and diversifying their portfolio with smaller, craft brands," as Anheuser-Busch has already acquired in the U.S., and SABMiller abroad.
 -- "The average consumer is unlikely to see a big change as both companies will like seek to maintain each brands identify and following." But "lack of competition" could mean fewer bargain prices "at the bottom end" of the cheap beer list. 

TUESDAY: Anheuser-Busch InBev says it has a tentative deal to buy SAB Miller for $106 billion, combining the two biggest U.S. industrial brewers and dozens more beer brands worldwide, at a time when resurgent regional breweries have won growing share of a flat beer market in the U.S. and other developed countries. Read the deal statement here. -- But won't they have to sell Molson's? asks Bloomberg here.

MONDAY: Altria, the U.S. tobacco giant formerly known as Philip Morris (it owns Marlboro cigarettes and Skoal chaw), will walk away with many of the benefits of the proposed acquisition of London-based SABMiller (they own Miller Beer) by Belgium-based AB InBev (they own Budweiser, Michelob, Rolling Rock and many more), while drinkers and brewery workers help share the $100 billion cost, writes John Colley, former executive managing director of French building-materials giant Saint-Gobain (whose U.S. headquarters is near Malvern) and now a professor of mergers & acquisitions at Warwick Business School in England.

Joseph N. DiStefano @ 9:47 AM  Permalink | 0 comments
POSTED: Thursday, October 8, 2015, 2:40 PM

"We are in New Jersey to stay," Jens Kuerten, spokesman for Germany-based Gerresheimer AG, tells me, after a sale and a shutdown of two Cumberland County factories by the multinational specialty glassmaker's Vineland-based Gerresheimer Glass Inc. division.

Gerresheimer this year closed the old Wheaten molded-glass plant in Millville, idling 100, and moved its former pharmaceutical-glass packaging operation to its refurbished Chicago Heights, Ill. plant. The company also agreed to sell its glass-tubing plant in Vineland, which employs 200, and another in Pisa, Italy, to Corning Inc. for about $220 million.

But Gerresheimer "will remain in Vineland," with its engineers and other central staff, supporting Chicago Heights, the newly-acquired Centor plant in Ohio, and other North American plants, Kuerten added.  Gerresheimer also continues to operate its plants on Forest Grove Rd. and Crystal Ave. in Vineland, along with the Kimble/Chase works. Between the offices and plants, Gerresheimer employs a total of 350 here.

Joseph N. DiStefano @ 2:40 PM  Permalink | 0 comments
POSTED: Thursday, October 8, 2015, 11:52 AM

Among the 10 largest U.S. cities, Alan Schankel at Janney Montgomery Scott LLC shows clients in this report that Philadelphia has the:

- Lowest median income: $37,000 per household, vs. low to mid $40,000s for Dallas, Houston and San Antonio -- and double that for the richest big city, San Jose, in Silicon Valley. (Philly has concentrations of old folks, students, poor people and others without good jobs.)
- Second-worst unemployment rate: 6.1% in July. Only Los Angeles was higher at 6.8%. San Antonio was lowest, below 4%.
- Second-lowest population growth rate: 2.25% from 2010-mid-2014. Only Chicago grew more slowly. NYC and LA were 3-4%, Texas and California cities grew faster than 5%. 
- Second-worst credit rating: A2 for Moody's, A+ for S&P. Only Chicago, at Ba1/BBB+, is considered less solvent than Philadelphia (and that's still investment-grade). San Antonio is tops, at triple-A. Everybody else is double-A+/-
Also: Philadelphia's financial reserves are razor thin: just 3% of the budget, half of what New York has set aside. No other Top 10 city is below 10% (though Chicago's numbers are suspect).

Better news: City debt and pension burdens for Philadelphia are below the average for big U.S. cities. Plus -- this is a sign of weakness, but also opportunity -- Housing values here are the cheapest among the big cities on either coast (median $142,500, less than one-third of New York, San Jose or San Diego), also below Chicago, Phoenix and the U.S. average, though still higher than the big Texas cities. Property value per person ($62,000) is the second-lowest; only San Antonio is lower, but that doesn't stop San Antonio from being a solvent, high-growth metro center.

Joseph N. DiStefano @ 11:52 AM  Permalink | 0 comments
POSTED: Wednesday, October 7, 2015, 12:59 PM
RevZilla Founders, Anthony Bucci (L), Matt Kull, and Nick Auger stand on the main floor of their office space located at 4020 S. 26th St., in Philadelphia, Pa., on Feb. 24, 2015. (Jessie Fox /

"We are hiring like crazy," says Anthony Bucci, who cofounded online motorcyle marketing and sales giant RevZilla in his partner's Old City garage in the recession year 2008 ("We ate ramen for three years.") Self-funded, RevZilla employs 200: is seeking dozens more developers-marketing-analytics people; sold $75 million worth of leather, plastic and metal gear last year; expects to sell $105 million in 2015 from its headquarters-development center-retail store-warehouse in Philadelphia's Navy Yard district.

Bucci pitched to a crowd of more than 300 this morning at, the National Retail Association's digital-mobile sales conference at the Pennsylvania Convention Center. In jeans and an open-necked lavender shirt, Bucci fit right into a marketing panel run by the personalizing digital marketer Chris Bye, of Philadelphia's Tonic Design, whose clients include J&J and Ralph Lauren as well as RevZilla.    .

"TeamZilla, this is local, this is fast, this is fun," chanted Bucci, a software developer by profession (past clients included Calvin Klein and Speedo). "We are the most influential and fastest-growing space in the motorcycle vertical," he boasted, eight years on from the founders' dream of creating the "Barneys of motorcycles, the Zappos of motorcycles."

Joseph N. DiStefano @ 12:59 PM  Permalink | 0 comments
POSTED: Wednesday, October 7, 2015, 10:03 AM

Pennsylvania school district property owners and the state Treasury paid a combined $2.6 billion into the Pennsylvania Public School Employees' Retirement System (PSERS) in the year ended June 30. The total should top $3 billion this fiscal year and is scheduled to rise again into the future.

That's not counting investment profits on the pension system's investments (just 3% in the fiscal year ended June 30) or employee contributions (which are also, of course, funded by taxpayers). Annual increases at far above the rate of inflation have squeezed flat school district budgets around the state (see my stories and data on the local school and police pension funding here); in Quakertown school board members voted in protest to delay their PSERS contributions; other districts have considered similar actions.  

Yet the payments aren't enough to keep PSERS from getting broker, says chief investment officer James Grossman. PSERS "continues to be underfunded by school employers and the commonwealth," Grossman noted in this statement Tuesday.

Joseph N. DiStefano @ 10:03 AM  Permalink | 0 comments
About this blog

PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at, 215.854.5194, @PhillyJoeD. Read his blog posts at and his Inquirer columns at Bloomberg posts his items at NH BLG_PHILLYDEAL.

Reach Joseph at or 215 854 5194.

Joseph DiStefano
Also on
letter icon Newsletter